Lean against the wind: The effect of policy uncertainty on a firm's corporate social responsibility strategy

Daoju Peng, Gonul Colak*, Jianfu Shen

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

11 Citations (Scopus)

Abstract

We examine the effect of policy uncertainty on firms' strategy of corporate social responsibility (CSR). During uncertain times, firms strategically increase their commitment to CSR causes. Policy uncertainty is positively associated with CSR performance regardless of the estimation method. CSR strategy can substitute for lobbying when firms attempt to manage policy uncertainty. Improved CSR performance can reduce firms' exposure to policy uncertainty which indicates that CSR commitment can deliver insurance-like benefits. The findings highlight the value of CSR commitments during uncertain times.
Original languageEnglish
Article number102376
Peer-reviewed scientific journalJournal of Corporate Finance
Volume79
ISSN0929-1199
DOIs
Publication statusPublished - 03.02.2023
MoE publication typeA1 Journal article - refereed

Keywords

  • 512 Business and Management
  • corporate social responsibility (CSR)
  • policy uncertainty
  • hedging strategy
  • gubernatorial elections

Areas of Strength and Areas of High Potential (AoS and AoHP)

  • AoS: Financial management, accounting, and governance

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